Ontario business needs to hustle on EU exports, panel says

Ontario needs to move fast if it wants to benefit from Canada-EU trade deal.

European Commission President Jose Manuel Barroso (R) shakes hand with Canadian Prime Minister Stephen Harper (L) during a press conference following a signing ceremony to finalise a free-trade accord more than four years in the making, on October 18, 2013 at the EU headquarters in Brussels. AFP PHOTO / GEORGES GOBET

Ontario business needs to start hustling now if it wants to reap the benefits of the free trade deal Canada is about to sign with the European Union, an expert panel says.

While the tentative pact, signed a week ago, could take several more months to finalize and approve, business owners need to move quickly while Canada has a “first mover” advantage, the panel told a business audience in Toronto Friday.

If it fails to act soon, Ontario business could find themselves missing out, not only in Europe but in their home market, the event organized by the Ontario Chamber of Commerce heard.

“The government is about to hand us a very useful tool. If we don’t use it, we will be overtaken,” said Joy Nott, President of Canadian Importers and Exporters. “We have a three-to-four year window of opportunity to get in the market before the Americans do.”

The panel was held a week after Prime Minister Stephen Harper signed a tentative deal that would open up a market of 500 million people and $17 trillion (U.S.) a year in sales to Canadian business

The sweeping pact, far larger in scope than the North American Free Trade Agreement, also gives European business unprecedented access to Canada, including government procurement contracts.

Harper has described the deal as a huge win for Canada, in part because it gives Canadian goods and services preferential treatment over other countries that do business with Europe.

“This is a very big deal for Canada,” said Phillip Turi, general counsel for the Canadian Manufacturers and Exporters.

It will make Canadian products and services cheaper and more competitive, Turi said, as tariffs disappear on everything from vehicles (10 per cent), to medical devices (8 per cent) to iron and steel (7 – 8 per cent).

Turi said his group believes the deal will create even more than the 80,000 jobs predicted by the Prime Minister’s office as new companies set up shop in Canada in order to reach the EU market.

But that first mover advantage could quickly disappear as other countries sign similar free trade pacts with Europe, the chamber’s expert panel warned.

Outside of some large multinationals, Ontario business doesn’t have a good track record on exports, the panel said.

Less than 7 per cent of small- and medium-sized Ontario firms sell outside the country and the average value of those exports rank below 47 of 50 U.S. states.

Indeed, many Canadian businesses are still trying to figure out how to take advantage of the North American Free Trade Agreement, Nott said. NAFTA came into force in 1994.

Canada’s dairy industry — which has objected to the European trade pact — came in for a blast from Lawrence Herman, an international trade lawyer with Cassels Brock and former Canadian diplomat.

Canadian dairy farmers have complained the deal more than doubles the amount of European fine cheese that can enter the country, putting domestic producers at a disadvantage.

That kind of protectionist attitude is just the opposite of what the country needs to compete in an increasingly global economy, Herman said.

“This is a completely ridiculous position for them to take,” Herman said.

“The dairy industry represents what’s wrong with the Canadian supply management system. It safeguards a small Canadian market without thinking globally,” Herman said

New Zealand exports far more cheese than Canada — $5 billion a year versus $250 million — and is a much smaller country, he noted.

“I don’t see why it wouldn’t be in Canada’s interest to diversify its markets,” Herman said.

However, he cautioned the Prime Minister’s view of the trade deal has focused entirely on its benefits to Canada, without acknowledging it will also mean more competition here at home as tariffs on European goods fall.

“What’s not explained is the Canadian market is also opening up,” Herman said. “There will be a need to have a defensive strategy as well.”

When it comes to trade deals, it’s not enough to compete on price, the panel said. Companies need to be aware of differences in regulations, the panel said.

A Canadian steel component maker recently lost a bid on an EU project because it hadn’t been certified to EU safety standards

Fortified flour in the U.S. is defined differently than fortified flour in Canada.

Another big challenge for smaller firms is finding people to do business with in overseas markets.

Industry associations like the chamber of commerce and manufacturers and exporters say they’re trying to help by creating websites, and running workshops and finding other ways to help business reach these new markets.

The chamber, for example, helps qualified companies to obtain grants to attend overseas trade shows and build their export business.

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